MPs to get 'restrained' 2.2% pay rise

As Leader of the Opposition, David Cunliffe's pay will rise from $262,700 to $268,500. Photo / APN

Backbenchers will get $3,500 more a year and Key's salary goes up to $428,500

The Remuneration Authority has approved a "restrained" pay rise for MPs, giving each backbencher $3,500 more a year and raising Prime Minister John Key's salary by $9,500.

The authority, which oversees the public sector's pay rates, recommended a rise of 2.2 per cent to MPs' base salaries, backdated to July.

This means Mr Key's salary will jump from $419,300 to $428,500 and his deputy, Bill English, will go from $297,400 to $303,900.

Cabinet ministers will receive $268,500, up from $262,700, and Opposition Leader David Cunliffe will get the same. The base salary for backbench MPs will rise from $144,600 to $147,800.

Mr Key had told the authority restraint and leadership in the public sector were needed. In a letter, he said an increase of 1.4 per cent would be appropriate, in line with the consumers' price index.

The authority said that MPs were entitled to a pay rise of 2.8 per cent, but it decided to apply a lower rate of 2.2 per cent "given the continued need to restrain public-sector expenditure as the economy improves after the global economic crisis".

The authority worked out base salaries for backbench MPs by considering the pay of public servants with jobs of similar complexity and responsibility. It then deducted the value of their employer superannuation subsidy and travel benefits.

Senior MPs are not paid according to market rates, and get a much-discounted salary.

The authority said the gap between pay levels in the private sector and in ministerial positions in Parliament was now much greater than in the past and it would review this increasing gap over the next year.

Meanwhile, ministers received the same pay rise as other MPs.

Mr Key said he did not support ministers receiving higher pay rises than other MPs. "Ministers, like other MPs, are not 'employees' as such and there is an element of public service and sacrifice involved in them taking on these roles."

Travel allowances are trimmed to $6,500, so the increase to an MP's pay package is effectively 1.96 percent.